Taxpayers paying $450,000 a month to cover MaRS loan

Ontario taxpayers are handing over $450,000 every month to cover interest payments on a loan to MaRS as part of the province’s bailout of the MaRS research centre, pictured at the corner of College Street and University Avenue in Toronto, Thursday, May 29, 2014.

Ontario taxpayers are handing over $450,000 every month to cover interest payments on a loan to MaRS as part of the province's bailout of the troubled research incubator.

The province could be on the hook for as much as $7.1-million annually in interest payments under the terms of its deal with the organization.

In total, Ontario has spent $308.8-million to date bailing out MaRS after the incubator got involved in a failed real estate deal. Most of that is a $224-million loan Crown corporation Infrastructure Ontario gave MaRS in 2011 to expand its facilities with a new office tower at College Street and University Avenue, near the legislature in Toronto.

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Under the terms of the loan agreement, the government agreed to pay the interest if MaRS defaulted. The organization told the government in January of this year it could not make its loan payments, and the province stepped in.

Economic Development and Infrastructure Minister Brad Duguid on Thursday defended the deal, in which the loan is secured against the title to the office tower.

"There was always an element of risk to this project," he said before heading into a cabinet retreat at an aquatic centre at the University of Toronto Scarborough campus. "The key here is that risk was underwritten by the value of the building."

The province is also considering subsidizing MaRS's operating costs and paying to move civil servants into the tower. If it does, taxpayers could be on the hook for hundreds of millions more, on top of what they have already paid.

Putting bureaucrats in the building could effectively allow MaRS to pay back the loan using government money, and keep ownership of the tower.

Mr. Duguid said Thursday he had not made any final decision on whether to do that. He has assigned two real estate experts to give him advice, and they are still looking at different options.

"I was a student here and my professors treated me a lot better than you guys are," Mr. Duguid joked to reporters at UT Scarborough. "At least when I was writing an exam they gave me an opportunity to fail or pass, and they didn't mark the exam before it was finished."

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If MaRS defaults on the loan, the province will get ownership of the building.